Page 108 - CA Inter MCQ Book

CA RAVI TAORI CA INTER AUDIT MCQs
III. "In case of a government company, the statutory auditor under companies Act is appointed by: -
(a). Shareholders in annual general meeting
(b). Board of directors in annual general meeting
(c). CAG which is a constitutional authority
(d). CAG which is a constitutional authority in consultation with Central Government"
IV. "Which of the following is incorrect regarding scope of actions of audit committee constituted
under section 177 of Companies Act, 2013?
(a). The audit committee can make recommendation regarding appointment and terms of
appointment of auditors.
(b). The audit committee cannot make recommendations regarding remuneration of auditors.
(c). The audit committee can review and monitor auditor’s independence and performance.
(d). The audit committee can undertake monitoring of effectiveness of audit process."
V. "Which of the following is correct regarding formation of audit committee under section 177 of
Companies Act, 2013?
(a). The audit committee is to be constituted by every public company.
(b). The audit committee is to be constituted by every public company and private company having
paid up capital and reserves of more than ` 100 crore.
(c). The audit committee is to be constituted by every listed public company.
(d). The audit committee is to be constituted by every listed company and private company having
paid up capital and reserves of more than ` 100 crore."

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• M/s ANS & Associates have been appointed as the auditors of Star Ltd. for the Financial Year
2019-20.
• During the year under audit, Star Ltd has issued share capital at a premium of Rs 5 per share.
The auditors understand that certain provisions as per the Companies Act 2013 related to the
issue of shares at premium are applicable to the company.
• Also, Star Ltd. has issued Sweat Equity shares to its employees during the year. M/s ANS &
Associates has advised its audit staff to check in particular whether the company has complied
with the relevant provisions related to the issue of sweat equity shares as per the Companies
Act 2013.
• Further, the auditor understands that the Company Star Ltd. needs to file various forms with
different authorities when there is a change in the share capital of the company during the year.
• Also special consideration is given under audit to the treatment of reserves as Revenue vs
Capital by the company during the financial year.

Based on the above facts, answer the following:-"
I. "As there is a change in the share capital of Star Ltd. during the year, which of the following
combination related to the forms to be submitted is not correct:-
(a). Form SH 7: To be filed with Ministry of Corporate Affairs
(b). Form CRA 2: To be filed with the Central Government
(c). Form PAS: To be filed with the Ministry of Corporate Affairs.
(d). Form FCGPR: To be filed with the Reserve Bank of India."
II. "The Securities Premium Account can be used by the Star Ltd. for various purposes, except one:-
(a). In writing off the preliminary expenses of the company
(b). Towards the issue of the unissued shares of the company to the members of the company as
fully paid bonus shares
(c). For purchase of its own shares and other securities under section 68.
(d). To be used as working capital."
III. "With regard to the issue of Sweat Equity shares following conditions have to be complied.
Identify the incorrect one:-

(a). The issue is authorized by ordinary resolution passed by the company.
(b). The resolution should specify the number of shares, the current market price.

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